Finance seminar - Associate Professor Ting Xu - Toronto University

A seminar by Associate Professor Ting Xu from Toronto University

Title: The Impact of Patient Capital

Abstract: We show that investor patience shapes venture capital (VC) investment strategies and outcomes.
A randomized experiment with Chinese fund managers shows that managers tailor fund
duration and project holding periods to the perceived horizons of their limited partners (LPs).
We then exploit a 2014 reform that opened RMB-denominated VC funds to insurers, comparing
treated RMB funds with unaffected USD funds run by the same general partners (GPs). Insurer
entry displaced shorter-horizon LPs and shifted funds toward longer holding periods and
earlier-stage investments, improving portfolio company outcomes. This pass-through of patience
weakens when secondary markets for LP stakes are more liquid.

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